2017 elections in Rwanda: How will FDI be impacted?

This year will see a number of presidential elections take place across Africa – with Rwanda, Kenya and Angola being key markets to watch.

For the case of Rwanda, How we made it in Africa, a magazine that covers African business status, talked to experts at the Institute for Security Studies (ISS) about how these upcoming polls could affect Foreign Direct Investment (FDI) in the respective economies.

A third term for Rwanda’s president

At the beginning of 2016, Rwanda’s President Paul Kagame announced he will be running for a third seven-year term. This followed a referendum in December 2015 where 98% of voters agreed to modifying the constitution to allow Kagame to do so. Once this term is served, Rwanda’s presidential terms will be reduced to five years, and once again limited to two terms. But this only comes into effect in 2024, meaning that Kagame could run for a fourth and fifth term – ruling until 2034.

Many question the validity of the outcome of the constitutional referendum. Kagame has been criticised for not enabling freedom of political expression or association, and some believe he silences political opponents and critics. It is for this reason it is widely accepted that he will win his third term in the presidential elections set to take place on 4 August 2017.

However, Stephanie Wolters, head of the ISS’s Peace and Security Research Programme, notes that Kagame has managed to convince international business community and investors (mostly) that the system he is running is central to the success and development of Rwanda.

Since the 1994 genocide that resulted in the mass murder of hundreds of thousands of Tutsis, Rwanda has made huge development strides – much of which can be accredited to Kagame’s leadership. Infrastructure investment, an improving business environment (it is one of the easiest places to do business in Africa) and low levels of corruption are just some of the reasons why foreign investors have been attracted to Rwanda in recent years. And Kagame is often celebrated for reforming the country.

“Now that is not a position that everybody shares, but it is certainly something that Paul Kagame has put forward very strongly. And I think he has done so successfully to the extent that he wasn’t heavily criticised [when he announced his bid for a third term]. Some countries like the US did come out quite clearly against his referendum and another mandate for him, but on the other hand you have international organisations and international investors still very interested in Rwanda,” she continues.

“You still have organisations, like the World Economic Forum for example, holding key meetings in Rwanda and therefore, by some extent, endorsing Kagame and his policies.”

She concludes: “I don’t think in the context of Rwanda that Kagame going for another mandate will have a negative effect on investment in that country.”